Hibu Plc won permission from a London court for a debt restructuring deal that gives lenders control of the U.K. directories publisher.
The company will reduce its borrowing to about 1.5 billion pounds ($2.5 billion) from about 2.3 billion pounds and lenders will take ownership of a new parent company, according to a filing presented to the court. A lawyer representing a shareholder group expressed concerns about the process although he didn’t oppose the plan.
The debt deal follows a drop in the company’s earnings as competition from the Internet triggered a decline in its paper-based business. The Reading, England-based company joins Italian directories publisher Seat Pagine Gialle SpA in seeking court help to reduce borrowings.
“The restructuring will involve approximately 700 million pounds of debt being released and the remainder of the debt being amended and restated in order to place the group on a substantial footing,” according to the company filing. Creditors will also receive a 130 million-pound cash payment in addition to shares in the new company, it said.
The debt writedown will leave Hibu with borrowings including 500 million pounds of loans maturing in five years and 920 million pounds of payment-in-kind notes maturing in 10 years. PIK notes allow a borrower to pay interest with more debt.
Hibu’s earnings before interest, tax, depreciation and amortization for the six months to September 2013 totaled 107 million pounds, 45 million pounds lower than the same period the previous year, and less than half the 231 million-pound figure the year before, according to data compiled by Bloomberg and company statements.
The company’s borrowings swelled after completing several acquisitions, including the 3.1 billion-euro ($4.2 billion) purchase of Spain’s Telefonica Publiciad e Informacion in 2006.
The case is in the matter of Hibu Finance (UK) Ltd, Hibu Connect SAU, Hibu (USA) LLC, Hibu Inc., Hibu Holdings (USA) Inc., Hibu of Pennsylvania Inc., Hibutel Inc., Znode Inc. at the High Court of Justice, Chancery Division.
To contact the reporter on this story: Julie Miecamp in London at firstname.lastname@example.org